P L D 1952 Lahore 89 (PLP)

S. A. RAHMAN, J.‑This is a regular second appeal arising out of a suit brought by Mr. M. M. Azam, Deputy Controller of Military Accounts, for recovery of Rs. 2,780‑7‑0 against the Imperial Bank of India, in the Court of Ch. Muhammad Anwar, Subordinate Judge 1st Class, Lahore. The trial Sub‑Judge decreed the plaintiff's claim with costs. The defendant's appeal was dismissed by the learned Additional District Judge, Lahore and hence this second appeal. The material facts may be summarized as follows. Cheque No. 233057 dated the 29th of July 1947, for Rs. 2,780‑7‑0, was drawn by the Military Accountant General, Pay Section, Meerut, (later on referred to as the M. A. G.) on the defen dant Bank, in favour of the plaintiff. The cheque had on it end orsed, words to the effect that the amount was to be debited to the account of the Controller, Military Accounts, Northern Command, Lahore Cantonment (hereinafter referred to as the C. M. A.). The plaintiff was negotiating for the purchase of property at Murree with a property broker named Durga Das. During those negotiations, the plaintiff handed over the cheque in question to Durga Das. with an endorsement in blank on its back. The plaintiff explained that the negotia tions fell through later and he then demanded the return of the cheque from Durga Das. At the same time, he sent a telegram on the 14th of September 1947 to the defendant Bank and followed it up with a letter on the 20th of September 1947, requesting the defendant to stop payment of the cheque It may be noted that the cheque in question had been crossed by the drawer. With the endorsement in blank on the reverse by the plaintiff on the 7th of September 1947, it became payable to a holder in due course, through a bank. The bank sent a reply on the 22nd of September 1947 to the plaintiff per letter, Exh. P. I advising that the C. M. A. should be addressed direct, who would give instructions to the bank. Apparently, the plaintiff had already moved the C. M. A. who wrote to the defendant Bank on the 20th of September 1947, vide Ex. P. 5, enquiring whether payment of the cheque had been made and advising that, if the payment had not yet been made, to withhold it. The bank entered a stop note in its ledger in the account of the M.A.G. On the 25th of September 1947,the bank wrote the letter," Exh. P 6, to the Junior Controller, Military Accounts, Lahore, referring to the C. M. A's letter dated the 20th of September 1947 (Exh. P. 5) and pointing out that the cheque did not appear to have been used for drawing on the account of the C. M. A., Northern Command. It was requested by the bank that the matter may be looked into under advise to the bank. Some further corresp6dence followed between the C. M. A. and the Treasury Officer, Lahore, and the C. M. A. and the bank. The C. M. A. specifically asked for a no‑payment certificate regarding the cheque, if it had not been cashed. Such a certificate was signed by the Manager of the defendant Bank and sent to the C. M. A after the C. M. A. had confirm ed that the cheque had been drawn on the account of the C. M. A., Northern Command. The bank's ledgers apparent ly contained two accounts, one in the name of the M. A. ,G., Meerut, and the second in the name of the C. M. A., Northern Command. On the 16th of October 1947, however, the bank cashed the cheque which had been received through another bank, and debited the amount to the M. A. G's account There was an incomplete stop entry in red ink in the last column of 'the ledger on the relevant page of this account, but this appears to have been crossed. out by an official of the bank: A stop entry had been made against the C. M. A., Lahore Cantonment's account. The stop entry was carried forward to the 18th of October 1947, but no further. It was not till the 26th of January 1948 that the junior Controller, Military Accounts, pointed out to the bank that payment had been wrongly made for this cheque. The plaintiff brought the suit out of which the, present appeal has arisen for recovery of the amount in question by way of damages suffered by him on account of the negligence of the bank. The suit was resisted on the ground that the plaintiff had no locus standi to sue as there was no privity of contract between him and the defendant Bank. It was pleaded that he could only sue either the drawer or the endorsee, for damages. It was denied on behalf of the bank that they received due intimation for stopping payment of the cheque, as the drawer (M. A. G.) had not countermanded the cheque. The issues framed by the trial Court were as follows :‑ (1) Has the plaintiff a locus standi to sue the defendant Bank for the amount in question? (2) Was the defendant Bank duly informed to stop pay ment of the cheque before the payment was actually made? (3) If so, is not the bank liable to make good the amount of the cheque to the plaintiff, in case issue No. (1) is found in his favour? (4) Relief. The first three issues were discussed together by the learned Sub‑Judge who found that the bank had been guilty of negli gence in making the payment to Durga Das or his agent bank, thus causing loss. to the plaintiff who must be compensated. He held that the bank had been duly informed that the cheque should not be cashed and the bank itself had issued a no‑pay ment certificate in favour of the C. M. A., and the plaintiff to the effect that the amount of the cheque was safe and they rested content with that position. It was pointed‑out that, if the bank had told the C. M. A. or the plaintiff that the instruction in respect of the countermanding of the cheque should be issued by the M. A. G., that might have been arranged for, in time. It was held that the payment of the cheque was .not made in due course within the meaning of section 10 of the Negotiable Instruments Act. These findings were substantially affirmed by the learned Additional District judge on appeal. The first point taken in this Court. by Mr. Norman Edmunds on behalf of the bank was that the plaintiff, who was only the payee of the cheque, had no locus standi to sue, irrespective of whether the C. M. A. or the M. A. G. was the real authority concerned with the account. He argued that a cheque is not an equitable assignment of the drawer's balance at his banker's and that the relation between a banker and the customer who deposits money into a bank, is the ordinary relation of debtor and creditor, with a superadded obligation arising out of the custom of the banker to honour the customet's drafts and that this relationship does not partake of a fiduciary character, nor does it bear an anology to the relation between principal and factor or agent who is quasi trustee for the principal in respect of matters within the scope of his agency. Consequently, Mr. Edmunds contends, there was no privity of contract between the drawee bank and the payee of the cheque and the latter would have no right to sue the bank, in case of the dishonour of the cheque, unless the statute permitted him to do so. The right to sue for damages in case of dishonour would only vest in the drawer of the cheque. Reliance was placed in this connec tion on a number of authorities by learned counsel. Reference may be made to Foley v. Hill ((1848), 2 H. L. C. 28), Hopkin. son v. Forster (Law Reports 19 E. 74), Schroeda and another v. The Central Bank of London Ltd. ((1876) 34 L. T. R. 735) and Beaumount v: Ewbank ((1902), 1 Ch. 889). These authori ties undoubtedly support the propositions of law contended for by learned counsel for the appellant. The principle laid down in Foley v. Hill was also referred to with approval by their Lordships of the Privy Council in Attorney‑General of Canada v. Attorney‑General of Cuba (51 C. W: N. 427). Our attention was also drawn to the judgment of Lord Pollock in Bank of Baroda v. Punjab National Bank (A. I. R. 1944 P. C. 58). In that case, it was held that a banker's business does not normally involve that a manager's authority shall extend to certifying post‑dated cheques and according, where a manager, had without authority certified a cheque post‑dated to June 20th, 1939, by writing on it on June 13th "marked good for payment on 20th June 1939", the bank would .not be liable on the cheque to a holder in due course a banker who had taken it from the payee as security for an overdraft when on presentation on due date, there were no funds in the drawer's account to meet the cheque. The certification of the cheque, It was further held, did not constitute an "acceptance" within the meaning of the English Bills of Exchange Act, 1882, or the Indian Negotiable Instruments Act, 1881, which sub stantially correspond, or the common law. Further, the holder in due course could not claim either in contract on the actual words used in the certification, there being no privity of contract between him and the drawee bank and no consider ation passing, or on an estoppel under the doctrine of Pickard v. Sears (1837) 6 Ad. and E. 469 and Jorden v. Money (1854) 5 H. L C. 185, that doctrine being limited to a representation as to an existing .fact, whereas here not only were no funds available, but the alleged representation related to the future. Such a contract, if it existed at all, would amount to no more than a non‑negotiable gratuitous promise and was not No exception can be taken to the principles laid down in the above authorities so far as the position under the law of contract is concerned. The argument based on them is rein forced by a reference to the provisions of the Negotiable Instruments Act. It is argued that the only instance in which a payee or holder of a crossed cheque is entitled to sue a banker is embodied in section 129 of the Negotiable Instru ments Act, which reads as follows :‑ "Any banker paying a cheque crossed generally otherwise 'than to a banker, or, a cheque crossed specially otherwise than to the banker to whom the same is crossed, or his agent for collection, being a banker, shall be liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid." This section places a statutory obligation on the banker and he would be liable for the breach of this obligation. In no other case, it was pointed out, the statute gives any right to the payee of a cheque to sue the drawee bank. However, the action in the present case is founded not on contract but on tort. In the plaint it is specified that the plaintiff bases his suit on the alleged negligence of the bank. The authorities cited above consequently do not appear to afford such assistance in the present case. It was then urged that on the assumption that the defen dant bank disregarded the valid countermanding of the cheque, it had not paid out the drawer's money but the bank's own money and so the plaintiff would have no cause of action against the bank. It is suggested that the only remedy open to the payee was to sue the original drawer of the cheque. But this was not a case of dishonour of the cheque by the drawee, entitling the payee or holder to sue the drawer, after due notice, as laid down in section 30 of the Act. The case, as I see it, is really based on the allegation that there was conversion of the cheque to the prejudice of the plaintiff, owing to the alleged negligence of the bank. The drawer, if sought to be made liable, may successfully plead that the cheque having been indorsed in blank by the payee and having been paid by the defendant Bank on presentation through another bank, there was no contravention of section 129 of the Act, which is the only section relating to crossed cheques, that could have been invoked by the plaintiff under the statute. This was not a case of dishonour of the cheque by the drawee bank at all and the drawer was not notified of the circum stances under which the cheque fell into unauthorised hands. If the contention of the learned counsel for the appellant were to prevail, this would leave the plaintiff without any remedy, although he might make out a good case in tort against the bank. The validity of the argument, therefore, in my opinion, is extremely questionable. This brings me to the issue whether the bank was in fact guilty of negligence in allowing the cheque to be cashed or not. In the words of Baron Alderson, negligence consists in " the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of. human affairs, would do ; or doing something which a prudent' and reasonable man would not do '. See Blyth v. The Birmin gham Waterworks Company ((1856), 11 Ex. 784). This being the criterion, I have no doubt on the facts of this case that the bank in fact failed to exercise that much care which a reason able and prudent man would have taken in view of the circumstances. The correspondence that passed between the parties and the bank and the C. M. A., makes it absolutely clear that the bank knew that the cheque in question had been drawn by the M. A. G., Meerut, on the account of the C. M. A., Northern Command, and was payable to the plaintiff. The bank was even at pains to get it confirmed from the C. M. A., that it was debitable to his account. For some reason, which is not clear, the bank official concerned scored out the red ink entry regarding the stopping of the cheque against the M. A. G's account, but retained it in the C. M. A.'s account. The explanation is put forward that the bank merely concerned itself with the payment on behalf of Government and on sending intimation of the payment to the Treasury Officer, next morning, received credit for the necessary money, from the Treasury Officer. It had no real duty to see that the payment was debited to the proper account, according to Mr. Edmunds. In the first place this explanation was not brought out in the evidence on the file. Secondly, as the cheque in this case had been drawn by the M. A. G., though it was debitable to the C. M. A.'s account, it was necessary for the bank to have the stop entry retained against both the accounts. That the clerk, who was incharge of the ledgers in the bank must have been cognizant of the payment made, long before it was pointed out to the bank by the C. M. A. on the 26th January 1948, is apparent from the circumstance that the stop entry even in the C. M. A.'s account, is not carried beyond the 18th of October 1947. Even the incomplete entry which had been scored out in the M. A. G.'s account should have put the bank official on inquiry. The bank had solemnly issued a "no‑payment" certificate to the C. M. A., in respect of the cheque in question, long before the date of the encash ment of the cheque and had given a promise that its further payment would be stopped. It cannot but be held, therefore, that the bank had been guilty of negligence in paying the amount of the cheque when it was presented. Much stress was laid on the fact that the non‑payment certificate was not strictly in conformity with the rule embodied in Art. 27 of the Civil Account Code, which required a drawer of a cheque to ask for such a certificate. But, the bank was under no mis conception of the actual position with regard to the identity of the drawer in this case. The native explanation, that be cause the M. A. G., who was the real drawer, did not counter mand the cheque, the mistake was made in the natural course of events by the bank, cannot be accepted in the face of the undertaking given by the bank itself that they would not allow the cheque to be cashed if the C. M. A. so directed. The position here was somewhat different from the case of an ordinary drawer as, though the drawer wag a different officer, the amount of the cheque was to be debited to the account of another officer and both officers were in the employ of Government. The bank cannot, therefore, be permitted to take shelter behind the technical rule embodied in Art. 27 of the Civil Account Code. It was only on the 10th of January 1948, that the bank wrote a letter to the C. M. A., somewhat disingenuously suggesting that they had then discovered that the cheque was not drawn on the C. M. A.'s account but was drawn by the M. A. G., whereas it is crystal clear that they had been aware of this position all along. I have no doubt, therefore, that negligence in the legal sense, has been brought home to the bank in this case. There is, however, force in the contention raised by Mr. Norman Edmunds that negligence simpliciter would not be tortious, unless it was proved at the same time that the defen dant owed a duty to take care qua the plaintiff. Learned counsel also cited some authorities in support of the pro position. It is needless to discuss them as the proposition is well‑established. The question then is whether a duty to take care on the part of the defendant bank can be spelt out of the circumstances of the present case or not. Such a duty, of course, must be owed to the plaintiff in order to entitle him to sue. Two things must co‑exist to support the plaintiff's suit negligence and a duty to take care, owed to the plaintiff. A reference to English authorities may be helpful in arriving at a conclusion in this respect, as very few cases of this type have come up for consideration by Courts of this country. In Le Lievre v. Gould ( (1893) 1 Q B. 491) the mortgagees of the interest of a builder under a building agree ment, advanced money to him from time to time on the, faith of certificates given by a surveyor to the effect that certain specified stages in the progress of the building had been reached. The surveyor was not appointed by the mortgagees and there was no contractual relation between. him and them. In consequence of the negligence of the surveyor, the certi ficates contained untrue statements as to the progress of the 'building, but there was no fraud on his part. It was held that the surveyor owed no duty to the mortgagees to exercise care in giving his certificates and they could not maintain an action against him by reason of negligence. The next case to be considered is Earl v. Lubbock (1905) 1 K B 253). In that case the defendant contracted to keep in repair a number of vans owned by a firm. The plaintiff was a driver in the employment of .the firm, and while he was driving falling from the van. The van had been in the hands of the defendant's workmen, shortly before and on the day of the accident, and the plaintiff's cause of action was" based upon the negligence of the workmen in failing properly to inspect and repair the defective state of the van, and the negligent manner in which the repairs were done. It was held that the defendant was under no duty to the plaintiff, and that there was no cause of action. Auchteroni and Company, v. Midland Bank Ltd. (1928), 2 K. B. D. 294) related to a case of a bill of exchange drawn by the plaintiff Firm for goods supplied, on N. P. Company which accepted it payable at‑the defendant Bank where they kept their account. On maturity, the bill was brought by W, a servant of the plaintiff, to the defendant's counter, duly endorsed in blank by the plaintiff Firm and money was paid to W who misappropriated it. The plaintiff sued the bank. It was held that the bank was not liable on the ground of negligence as no privity of contract existed between the defendant Bank and the plaintiff and the denfendant Bank owed no duty to the plaintiff. Nor could they sue for money had and received, as the drawing of the bill did not amount to an assignment in favour of the payee, of funds of the drawee. The defendant Bank was also held not liable for conversion of the bill as it was a negotiable instrument and they paid in good faith without notice of any defect in title and in accordance with the law merchant. This authority seems to be distinguishable on the facts from the present case. As I have found above, the bank here was guilty of negli gence. But the question of duty still remains to be resolved. The next case calling for consideration is Heseldine v. C A Daw and Son, Ltd., ((1941), 2 K. B. D. 343). In that case the access to upper floor flats in a block which was let out in a number of tenancies, was by a hydraulic lift which remained in the occupation of the landlord of the flats. The landlord made a contract of insurance with an insurance company against third party risks, in respect of the use of the lift and the insurance company made periodical inspections of the lift. The landlord also made a contract with a firm of engineers to adjust, clean and lubricate the machinery of the lift, once every month, to repack the glands when needed, and to report to him if any repairs to the lift were necessary. The lift was thirty‑five years old and to the landlord's knowledge had never been, overhauled. The engineers told the land lord that the rams of the lift were badly worn and scored and ought to be replaced by new rams, but they did not consider, and, therefore, did not tell the owner, that the lift was dangerous to use. They doubted whether they could obtain the necessary bars and tubes for the re‑placement owing to the war, and so they suggested that they should make an extra visit each month to grease the rams. The landlord agreed. On June 18, 1940, an employee of the engineers, repacked one of the glands and he negligently failed to replace it properly, thereby causing the gland to fracture, when the lift was worked. Next day, the plaintiff who wished to visit one of the tenants of the flats on busi ness, on the invitation of the owner's servant, used the lift to reach the tenant's flat, when, owing to the fracture of the gland, the lift fell to the bottom of the well and the plaintiff, was injured. In an action against the landlord and the engineers to recover damages for those injuries, the Court of appeal held that, whether the plaintiff was an invitee or a licensee of the landlord, the only obligation on the landlord was to take care that the lift was reasonably safe, and that he had fulfilled that obligation by employing a competent firm of engineers. to make periodical inspections of the lift, to adjust it and to report on it, and that, therefore, the land lord was not liable. The owner of the lift, it was held, was not aware of the danger in operating it. It was, however, held by a majority of the Lord Justices that the plaintiff was entitled to recover from the engineers on the ground that the repairer of an article owes a duty to any person by whom the article is lawfully used, to see that it has been carefully repaired, in a case where there is no reasonable opportunity for the examination bf the article after the repair is completed and before it is, used and when the use of the article by per sons other than the person with whom the repairer contracted, must be contemplated or expected. It appears difficult to infer any general principle from the above authorities which‑ can provide guidance for Courts in determining the existence of duty to take care in all cases. Apparently no authoritative classification of circumstances giving rise to a duty exists, but an attempt has been made to collect certain groups together under headings, though their extent cannot finally be determined. It would be instructive in this connection to refer to the leading case of Donoghue v. Stevenson ((1932) H. L. 562). Lord Atkin observed as follows in that case :‑ "It is remarkable how difficult it is to find in the English Authorities, statements of general application defining, the relations between parties that give rise to the duty. The Courts are concerned with the particular relation which come before them in actual litigation, and it is sufficient to say whether the duty exists in these circumstances * * *. In this way it can be ascertained at any time whether the law recognises a duty, but only where the case can be referred to some particular species which has been examined and classified". Nevertheless, the learned law lord himself tried to formu late a general principle for guidance. It may be noted that a similar principle had been laid by Brett, M. R., in Heaven v. Pender ((1883), 11 Q. B. p. 509). The learned Master of the Rolls expressed himself as follows.‑ "Whenever one person is by circumstances placed in such a position with regard to another that every one of ordinary sense, who did think, would at once recognise that if he did not use ordinary care and skill in his own conduct with regard to those circumstances, he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger". This proposition was later criticised as somewhat too wide and in the case of Le Lievre v. Gould (supra) the Court of Appeal limited the application of the dictum to cases in which the person or property of one person was in such proximity to the person or property of another that lack of due care might result in damage to the other. The principle as formulated by Lord Atkin runs as follows :‑ "You must take reasonable care to avoid acts or omissions which you can reasonably foresee, would be likely to injure your neighbour. Who then in law is my neighbour? The answer seems to be, persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation, as being so affected, when I‑am directing my mind to the acts or omissions which are called in question". In this way, the learned Law Lord laid down a principle to establish a proximity of relations sufficient to require a duty of care. Even this formulation has been criticised as not applicable to all cases. On the other hand, it has been accepted in several subsequent cases as a good working principle. In the words of Lord Macmillan :"the criterion of judg ment must adjust and adapt itself to the changing circumstances of life. The categories of negligence are never closed". The principle has been applied to new cases, although it is recog nised that it does not provide a complete criterion.‑See in this connection, the observations at page 362 of Haseldine v. Daw and Son, referred to above. In Hanson v. Wearmouth Coal Co. (1939), 55 T L R 749), Goddard, L. J. remarked that "the legal conception of duty due to `proximity' has been authoritatively laid down by the House of Lords in Donoghue v. Stevenson and the modern tendency is to enlarge and not to restrict the ambit of that duty". The principle was applied in Brown v. Cotterill (1934), 51 T L R. 21) where a monumental mason was held liable in negligence for his careless erection of a gravestone in a churchyard which subsequently collapsed upon persons lawfully using the churchyard. ,In that case, it may be noted, there was no relation of manufacturer and consumer between the parties as in Donoghue v. Stevenson, nor did the facts introduce the law relating to dangerous premises. The learned judge, however, expressly purported to follow the proposition enunciated in the leading case, referred to above. Lord Atkin also sought to apply the rule laid down in Donoghue v. Stevenson to the facts of East Suffolk Rivers Catchment Board v. Kant and another ((1941) A. C. H. L. 74). The majority of the Law Lords held in that case that when a statutory authority is entrusted with a new power it cannot be made liable for any damage, sustained by a member of the public, by reason of a failure to exercise the power. It was observed that, if in the exercise of its discretion, the authority embarks upon an execution of the power, the only duty owed to any member of the public is, not thereby to add to the damages which that person would have suffered, had the authority done nothing: It cannot be made liable, except to the extent just mentioned, for any damage that would have been avoided if it had exercised its discretion in a more reasonable way, so long as the authority exercises its discretion honestly. The facts of the case were that owing to a very high tide, a breach was made in a sea wall, as a consequence of which the respondents land was flooded. The appellants in the exercise of their statutory powers, undertook the repair of the wall, but carried put the work so inefficiently, that the flooding continued for one hundred and seventy‑eight days, thereby causing serious damage to the respondents' pasture land. It appeared from the evidence that by the exercise of reasonable skill, the breach in the wall might have been repaired in fourteen days. It was held by the majority of the Law Lords that the appellants were under no obligation to repair the wall or to complete the work, after having begun it and so they incurred no liability to the respondent, the damage suffered by them being due to natural causes. Lord Atkin's view that a duty was owed by the Board to the plaintiff because they came upon the plaintiff's land to do work which the plaintiff could have done themselves and that the circumstances indicated a relationship which supported such a duty owed to plaintiffs, to do the work with reasonable despatch, was not accepted by his colleagues. The principle seems to emerge from these authorities that it would depend on the circumstances of a particular case whether a duty to take care can be deemed to exist or not. The contention raised on behalf of the appellant Bank that they owed no duty, whether contractual, statutory or otherwise to the plaintiff in this case, does not appear to be sound. The learned counsel for the plaintiff‑respondent has referred to the definition of "payment in due course" embodied in section 10 of the Negotiable Instruments Act. This expression; according to section 10, means "payment in accordance with the apparent tenor of the instrument in good faith and without negligence, to any person in possession thereof, under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned". In this respect, the Indian Law differs from the English Law under which all that is required is that the payer should not hive any notice of the defect of the title of the person presenting the instrument and should have acted honestly, whether negligently or not (see sections 59 and 90 of the English Bills of Exchange Act, 1882). Section 85 of the Pakistan Act protects the drawee, if he has made payment in due course, on a cheque payable to order, purporting to be indorsed by or on behalf of the payee. But Mr. Norman Edmunds points out that in this case we are dealing with a crossed cheque which is specifically covered by section 129 of the Act and according to him, provided the banker pays the cheque in accordance with the provisions of that section, he is completely protected, vis‑a‑vis the true owner of the cheque. On the contrary, Mr. Muhammad Fazil for the plaintiff respondent, argues that sections 10 and 85 of the Act, were couched in general terms and the liability of the banker would still remain inter alia, to the payee, if payment was made not in due course that is with negligence as in the present case It is true that the contravention of section 129 of the Act would enable the holder or payee of a cheque,. with whom the banker has no privity of contract, to sue the banker but it does not appear that when an action is based on tortious negligence, that we cannot travel beyond the four corners of the Act. For the respondent, reliance was placed on Lalla Mal v. Kesho; Das (I L R 26 All. 493) and Lall Chand and others v. The Agra Bank Ltd. ((1891) 18 I A 111). In the Allahbad case, a shahjog hundi was drawn by a firm at Agra on their branch in Bombay. The payees endorsed the hundi over to one, L. M., who sent it to his agent at Bombay, for collection'. The agent died suddenly and, thereupon, the drawers, at the request of the payees, telegraphed to their branch in Bombay, to stop payment. Notwithstanding this, on the hundi being presented to the drawers Bombay Branch, by one, Channu Mal, who had somehow obtained possession of it, it was cashed. It was held that this did not amount to a payment in due course such as would discharge the drawers and the indorsees. It was re marked that a shahjog hundi was only payable to a respectable holder. This authority has been distinguished by Mr. Norman Edmunds on the plea that it related to a shahjog hundi and that the action was brought against the drawers. The distinc tion appears to be legitimate. In Lall Chand and others v. The Agra Bank Ltd., the Privy Council held on the evidence that the respondent Bank had, on the presentation by the appellants' servant, of a cheque drawn upon it in favour of the appellants, failed to pay the same in such manner as to be discharged of its obligation. The payment was made in that case wrongly to another person, instead of the appellants servant who had presented the cheque at the counter. On behalf of the appellant, this case was also distinguished on the ground that since the appellants' servant presented the cheque and was told to wait for payment, a contract arose between the appellants and the banker. This, of course, is a feature which distinguishes it from the present case. However, the proposition that a duty exists to the true holder, apart from contract or the provisions of statute, under the common law, in certain circumstances, is borne out by some English authorities. In Strange v. Wigney (VI Bingham's Reports 677 (1830)) the defendant Bank was held liable to the owner of a bank post bill, indorsed in blank, which the plaint iff had left by inadvertance in a hackney‑coach in London, but the loss of which she had proclaimed by means of hand bills. The defendant was a banker at Brighton, who had never heard of the loss and cashed the bill for a stranger, eight days afterwards. The circumstances, however, were that proper inquiries about the identity of the stranger were not made by the bank which was held to have acted negligently in that respect: The banker did not even enquire at what Inn, the stranger was putting up. The ruling relates to a bank post bill which is in the nature of a promissory note and, therefore, a negotiable instrument. It may be noted that in Hasetdine v. C. A. Daw & Son Ltd. ((1941), 2 K. B. D. 343), which has been discussed above, the repairing engineer was held liable for negligence, to the user of the defective lift. Clearly the duty upheld in that case, was not contractual in character. That a duty can even be under taken or assumed, without there being a contract for conside ration, such as would be enforceable between the parties, is clear from the case of Sharp v. Avery and Kerwood. ((1938) 4 A. E. L. R. 85). The facts were that the plaintiff was riding on the pillion of the third party's motor cycle The defendant, who was also riding motor cycle, had agreed t o lead them, as he was familiar with the road. At a left‑hand bend, the defendant drove straight ahead, off the road, on to a piece of waste land. He then applied his‑brake, whereupon the third party; who had followed him off the road, slightly collided with him, and the plaintiff was injured. It was contended that the plaintiff could not recover against the defendant, as the latter owed him no special duty, and his injuries were due to the negligence of the third party in driving off the road: It was held by the Court of Appeal that in the circumstances of the case, the defendant, having undertaken to lead the third party and the plaintiff, was under a duty to both of them not to put them in a position of danger. It may be noted that, though an agreement (albeity without consideration) is found to have been made with the second cyclist, no express agreement was made with the pillion‑rider. The latter was present when the agreement was made, and it was assumed that his safety must have been present to the mind of the con tracting party, when the agreement was made. There was, consequently a duty upon the leading cyclist to take care that he should not do anything which might entail injury to the pillion‑rider. In the present case, even though the view may be adopted on a narrow interpretation of the statute that the duty to make payment in due course, was owed by the banker to his customer i.e., the drawer of the cheque alone and not to the payee, still, as the banker has expressly under taken not to make payment, at the request of the payee, a duty arose on the part of the banker to take ordinary care to avoid such payment to the prejudice of the payee. It is idle for the' appellant Bank now to deny their liability in the face of their own undertaking, in the circumstances of this case. An analogous case was decided in Hampstead Guardians v. Barclays Bank Ltd. (39 T. L. R 229). In that case it was held that the bank was in fact negligent in cashing a cheque for a customer who had really no title thereto and therefore the bank was not protected by section 82 of the Bills of Exchange Act 1882, in an action‑ by the true owner. Section 82 of the English Act provides that where a banker in good faith and without negligence, receives payment for a customer, of a cheque crossed generally or specially to himself, and the customer has no title ‑ or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque, by reason only of having received such payment. In Lloyds Bank, Limited v. The Chartered Bank of India, Australia and China, (Law Reports K. B. D. 40 (1929)) the facts were that the plaintiffs were bankers having a branch office in Bombay. One L., their chief, accountant at the Bombay Branch, had express authority to draw cheques on other bankers with whom the plaintiffs had an account. He had an account with the defendants, who were bankers in Bombay, and another account with the plaintiff's Bombay Branch. His salary was Rs. 1,200 a month, which the plaintiffs paid by crediting. his account with their Bombay Branch. In 1922, he began fraudulently drawing cheques on the plaintiff's bankers, in favour of the defendants, to whom he sent written instructions to place the cheques to the credit of his account with them. Where these cheques had to be countersigned, he obtained the second signature by misrepresenting the purpose for which the cheques were drawn. He concealed these frauds for two years by means of false entries in the books of the plaintiffs' Bombay branch. When these fraudulent cheques, nineteen in number, had been cleared and the amounts credited to his account by the defendants, he immediately drew cheques against the balance standing to his credit. Of these last men tioned cheques, some were in favour of stockbrokers with whom he had speculative dealings, others he paid to the plain tiffs, either to the credit of his current account with them or in respect of special services to be rendered by them. The plaintiffs brought an action against the defendants 'for conver sion of the nineteen cheques. The defendants denied the conversion, and pleaded alternatively under the Indian Negotiable Instruments Act (to the same effect as section 82 of the Bills of Exchange Act, 1882) that they had in good faith and without negligence received payment of the cheques for a customer. It was held that the defendants had converted the cheques and that they could not rely upon the Negotiable Instruments Act, because they were put upon' inquiry by the facts that large sums of money were being transferred to them without any apparent cause; that this was being done by cheques signed by one who, to their knowledge, was an officer of the plaintiffs ; that these cheques were drawn not upon any banking account of the person signing, but on an account which the plaintiffs had with another bank ; that the person who signed the cheques the person who gave directions as to how they should be applied, and the person to whose credit the defendants were directed to place them, were one and the same person ; and that as soon as the cheques were' credited, as directed, large sums were drawn against them by this person in favour of payees which the defendants knew to be stockbrokers. This case also provides an instructive parallel to the present case in connec tion with the issue of negligence. On the facts as 'established it is clear that the appellant Bank was put on inquiry, after in fact it had undertaken a duty vis‑a‑vis the payee of the cheque, not to make payment, even if the cheque was presented through a bank. It was, therefore, guilty of the breach of this duty in negotiating the cheque in question. Mr. Norman Edmunds then sought to raise a defence on the plea of contributory negligence by the plaintiff. He argued that, even though the banker had given the plaintiff an assurance that the cheque could not be cashed when presented, he should have taken the precaution of asking the drawer of the cheque, namely, the M. A. G., Meerut, to countermand payment. This, in my opinion, amounts to no more than an attempt on the part of the appellant Bank to shift the res ponsibility of its own negligence to the shoulder of the plaintiff respondent. The appellant Bank itself had suggested that the C. M. A. should be requested to advise it, although it knew fully well that the cheque had been drawn by the M. A. G., and was debitable to the account of the C. M. A., Northern Command. Once, having given a clear understanding to the plaintiff that it would accept the instructions of the C. M. A. in this behalf, it does not lie in its mouth to charge the plaintiff with contributory negligence for his failure to move the M. A. G. I do not mean that the bank is in any way precluded from raising the contention that the M. A. G. was the proper person to countermand the payment. The peculiar circumstances of the present case, however, are that, although technically the M. A. G. was the drawer, the payment was to be debited to the C: M. A. and the bank evidently accepted the position that the word of the C. M. A. in. respect of countermanding the cheque, would be good authority for them. I, therefore, find that on the facts‑of the case, a duty was owed by the appellant Bank to the plaintiff‑respondent, to take care and that the appellant was guilty of negligence in the performance thereof. I am of the opinion that the plain tiff's suit was rightly decreed. The appeal fails and is hereby, dismissed with costs. SHABIR AHMAD, J.‑I agree. A. H. Appeal dismissed.